The Fastest-Growing Industries in Japanese Market: Why in Japan, the sun is Still Rising?

In recent years, gloom and doom stories about Japan have blindsided C-suites and boards in Japan and beyond. As a result, many businesses have missed great opportunities in the Land of the Rising Sun. We believe that to win in this age of recession, inflation, and factoids, CEOs need to rethink their strategies to enhance the odds of success in 2023. This article is a sneak peek of our upcoming report, “Beyond Japan’s GDP: Winners of Japan’s ¥ 1.4 quadrillion ‘market share war’.“

In this age of purpose regarding diversity and inclusion, Japan Inc. has a disappointing record regarding diversity and inclusion, which has been well documented. Indeed, in our report about women on boards, in the C-Suites, and the top management of the 3,812 largest firms across the OECD, the Japanese largest 570 firms unacceptably lagged at the bottom.

However, our diversity studies and reports differ from the traditional doom and gloom stories centered around the following narratives: the Japanese population is shrinking and aging fast. The country has fallen behind in the technology and innovation race, not to mention the hangover of the so-called Japan lost decades. The problem with those stories is that they miss many of the strengths and opportunities in the Land of the Rising Sun. While people were distracted by the hype of the metaverse and ChatGPT, we analyzed Japan’s business, the progress made by Japanese companies in recent years in silence, and the great opportunities across the country.

The Flawed Acronym Called GDP Seems to Have Created More Confusion than Insights

One of the misconceptions about Japan stemmed from the over-reliance on the outdated gross domestic product (GDP), which crudely gauges the gross value added but not the entire gross output. As such, through the lens of GDP, the economic activities seem smaller than they are while missing many important insights for business leaders regarding the macroeconomic state of affairs. For example, we were surprised to discover that despite all the negative talks about Japan, many industries were growing at unbelievable rates. Again, to our surprise, we found that, excluding the finance and insurance industry, the average Japanese industry grew by 6.3% in the fiscal year 2021, ending March 31, 2022.

Furthermore, we found that the total sales of Japanese corporations were more than twice the GDP figures. That is, firms across the country sold over ¥ 1.4 quadrillion (¥1,447 trillion) in the fiscal year 2021 ending March 31, 2022. Similarly, Japanese corporations made ¥96 trillion in ordinary profits and ¥71 trillion in net profit while paying more than ¥35 trillion in cash dividends. All these performance figures were up by a significant margin. Therefore, we argue that in the Land of the Rising Sun, the sun is still rising in many ways. In fact, in our 127-page special report, “Japan’s Gold Medalists of Profitability: Winners of Japan’s ¥96 trillion profits war,” we dived deeper into the Japanese market profitability landscape. It was our most popular Japan report in 2022.

The Fastest-Growing Industries in The Japanese Market in FY 2021-22

While many CEOs and other business leaders around the world turned their attention to inflation, recession and ChatGPT hype, a considerable chunk of industries in the Japanese market was growing faster than what many C-Suites worldwide can ever imagine about Japan, given the factoids about the country spreading like wildfire.

Below are the fastest-growing industries in the Land of the Rising during this time of higher interest rates and global economic disruptions across the global economy. To grow faster in 2023, CEOs need to craft strategies around the Japanese market’s growth engine. In other words, they need what we call a fast-lane growth strategy.

1. Iron & Steel industry grew by 37.5% to ¥18.7 trillion
2. Petroleum & Coal industry grew by 31.2% to ¥11.1 trillion
3. IT electronics equipment industry grew by 30.2% to ¥34.2 trillion
4. Production machinery industry grew by 19.5% to ¥25.5 trillion
5. Transportation & Postal Services industry grew by 15.1% to ¥66.0 trillion
6. Chemical & Allied Products (pharma & cosmetics) industry grew by 11.3% to ¥44.0 trillion
7. Rental & Leasing Products industry grew by 10.6% to ¥17.3 trillion
8. Real Estate industry grew by 9.6% to ¥48.5 trillion
9. Fabricated Metal industry grew by 8.8% to ¥18.4 trillion
10. Services industry grew by 8.2% to ¥159.1 trillion.

In short, we believe that C-Suites, boards, and CEOs worldwide need to rethink their strategies to win in 2023, given that our surveys and discussions with many business leaders revealed that some had been misguided about the great country called the Land of the Rising Sun. Thus, the time is now to craft an upgraded Japanese market strategy beyond the outdated GDP acronym because the insights provided by the GDP are not enough and are out of sync with the mental models of modern CEOs and business leaders.